Asian Paints net up 31% on festive fillip

Mumbai-headquartered Asian Paints reported a 30.5 per cent rise in consolidated net profit for the quarter ended December 31, as consumer demand for painting and repainting jobs remained high during the three-month period due to festivals such as Dussehra, Diwali and Christmas. Net profit was Rs 335 crore in the quarter versus Rs 257 crore in the corresponding period last year.

Net sales were up 19 per cent for the quarter to Rs 3,037 crore against Rs 2,559 crore reported a year ago. Input cost pressures during the quarter were visible, with the cost of materials moving up 8.1 per cent.

Asian Paints' other expenditure, which includes those on advertising and sales promotion was up 20.32 per cent during the quarter pointing to the higher spends on the latter. Typically, painting in India is undertaken post the monsoons especially during the festive period of October, November, December. Ad spends are typically high during this period to draw attention of consumers to brands.

In the last few years, the top three players including Asian Paints, Berger and Kansai Nerolac have been spending heavily on brand-building in the hope of improving sales. The increase in spends is partly linked to industry estimates that growth will continue to come from the decorative segment rather than the industrial segment.

The paints market in India is currently pegged at Rs 26,040 crore and is estimated to touch nearly Rs 50,000 crore in 2016. The ratio of decorative to industrial paints will continue to be 70:30, the Indian Paints Association, an industry body said recently.

Asian Paints remains unchallenged in the decorative market with a share of nearly 50 per cent. Berger and Kansai are far behind in terms of share.

The stock of Asian Paints was down on Monday on the Bombay Stock Exchange (BSE) , hovering at Rs 4, 296 per share, 0.32 per cent below Friday's close. The company's results were declared after market hours.